That’s the way it IS!!!
I recently tweeted this interesting observation
And almost as soon as I published it, It dawned on me that it is one thing to utter a Utopian, ideal statement and totally another to delve deeper into the inner workings of what works!!!
Human psychology is flawed and therefore world is full of idiots (me included of course, I will never admit it due to over confidence, that is a different matter)
What that means is that least resistance is always towards STUPID. In simpler language, if not restrained, we tend to damage ourselves. You will never find a person eating ,’healthy food’ as a natural first choice or waking up early just like that, or sleeping on time without any rhyme or reason. But there will be examples a plenty on the other side where people can wile away the entire life, leave alone a few hours.
Taking this point to extreme, Sadhguru gave an interesting example of people hurting themselves by piercing and tattoos all over.
If it was not for god given restrain of ‘pain’ these idiots would have plucked their body parts off, just for kicks…….
Our default conditioning is to go for Stupid and as if that is NOT enough a drift, added psychological factors totally screw the scales.
We always close the winning position( fear that profits might go away) and let the losing position go on. (Its not a loss unless I square it)
Take the above tweet for example.
Position sizing and discipline to follow a strategy is the difference between winners (3–5%) and losers( 95–97%).
strategies are over hyped. Just to prove my point , here is one for you for free.
condition 01 . A stock gaps up between 3–5%
condition 02. Within 01st fifteen minutes, it breaches its day’s low.
Action: short with days high as stop and close your position at 02:30.
Here is another 01. Sell a Straddle with fixed stops every day PERIOD.
Cannot get simpler than that.
Backtest it, (ofcourse you would need coding skills for that for which you never paid)
You think the edge of this strategy would go away because I have given it away, bla bla bla.
Don’t worry. Nothing will happen. Strategy never makes money. Ability to follow it does, and knowing when to stop does.
05 bad days in a row and you average joe will not only leave the strategy but also hurl a couple of abuses at me.
A webinar on core concepts like position sizing, coding and discipline will NOT sell. (as much as a strategy with a fancy name would).
That is human wiring. Screenshots of profits generate a dopamine rush. Looking at a graph and mental visualizations of what if scenarios will totally engulf your mind.
That’s the way it IS!!!
Lets take another example. This utopian dude has made his life goal to teach people that they should do Index investing and go direct and discard Regular plans.
What you forget is the Psychological hurdle Vs ease and a simple Arbitrage available in India. Let me explain.
When you buy a Regular mutual fund, the charges are levied behind your back, the NAV already adjusts for the fund managers fees and because you don’t see it (or pay for it as a separate check), you ignore it.
If an advisor asks for Rs 10,000/ per year for recommending you “Direct plans”. That 10k is something you will see and therefore shoo him away.
You are more than willing to pay a few lakhs unaware than pay a few thousand while being aware of it.
Read the topic of this blog, thats right
That’s the way it IS!!!
Arbitrage: India is such un-penetrated market that people have not heard of mutual funds, leave alone the concept of Passive Vs Active or Direct Vs Regular. If somebody is filling that gap, he has EVERY right to charge for it.
and who are you to say what is the right charge. Go raise your concern against ‘Apple’ first for charging a rip-off for their “Airpods”.
Bottom line is,
That’s the way it IS!!!
You can either get intrigued by the observation and marvel at human psychology at work or be a utopian fool crying foul and generating negative energy.
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